About

About this blog

Infrastructure has in the 2010s become a hot topic in the United Kingdom. People are starting to form views about it, but it’s fiendishly complex and ignorance – in the public, politics and the media – is rife. This is a blog about the financing of public infrastructure (including PFI and other types of public-private partnerships) and about some of the public policy and political issues. I promise to write about stuff only when I think I know what I’m talking about. It will mainly focus on the UK but will go abroad where possible.

About me

My name’s René Lavanchy. I used to be senior reporter for transport and telecoms at Infrastructure Journal. Before that, I was a staff reporter at Tribune magazine and wrote a different blog. My work has been published in Total Politics, The Guardian online and Private Eye magazine amongst others.

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3 Responses to About

  1. Bruce says:

    Good luck with the new blog Rene!

  2. Bruce says:

    Hi Rene, have you considered writing a piece on project bonds? There was a bit of a false dawn in 2009 when the bank lending meltdown led a lot of people to believe that (even with the demise of the monolines), we would begin to see bond financings play a greater role in project finance. But it didn’t happen. Why? A slow supply of projects as governments wound in spending… Banks supporting their core clients in key geographies… Abundant liquidity in local bank markets in places like the Middle East… Pension funds and life insurers’ lack of expertise… Credit ratings not meeting the minimum sought by institutions… Banks and sponsors taking the risk on hard/soft mini-perm structures… Probably a mixture of these reasons and more. And it seems a shame given the natural, long term fit which institutions are looking for in order to match their liabilities. But 2013 may prove to be the year things turned around – a melange of wrapped, unwrapped, fixed and index-linked on Leeds Housing, Aberystwyth, Edinburgh and Hertfordshire university accommodation projects; Castor Gas Storage and Greater Gabbard OFTO (EIB Project Bond); R1 Slovakia (this is a transport project so should be right up your street); and Shuweihat 2 in Abu Dhabi. So, it now appears there is some momentum gathering. And as you point out in one of your blog posts, Allianz just featured on the M8 project. Why? Bank regulations tightening (Basel 3’s NSFR has a impact on banks’ ability to lend long term)… A constrained and finite pool of bank capital and the need to refinance existing deals… Projects being structured with pension funds etc in mind (e.g. ownership or long term head-leasing of the assets)… Attractive yields compared with traditional investment grade sovereign and corporate bonds. And this is great right? Long term investors doing deals from day one, pre-construction. Hopefully the deals which closed in the UK and Europe will start to kick things off in other parts of the world, where bond financings have also been thin on the ground in recent years. However, I still see significant bank involvement over the years to come: 1) There are ways they can adapt to meet their clients needs, such as by issuing covered bonds like the German banks have been doing since the 18th century – 10-15 year plus covered bonds mapped out over a particular pool of infrastructure assets. (So there’s no need to issue project bonds in order to give some investors primary exposure to the project finance asset class, let the banks act as the go-between until their appetite gets there.); 2) Banks will probably remain faster and more flexible when it comes to executing deals. You can probably think of a better analogy than I can to describe the difference between banks and institutions, but to my mind (be aware I’m writing this late at night), a bank is like a Mini Cooper, nimble and quick and suited for multiple short journeys around town whereas an institution is like a Rolls Royce, generally better for longer ones. (Occasions which suit a Mini Cooper will no doubt continue to arise.)

    This should give you a good starting point for some Pulitzer Prize winning journalism.

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